BNM Likely To Maintain OPR At 2.75 Pct For 2025 - BMI

KUALA LUMPUR, July 11 (Bernama) -- Bank Negara Malaysia (BNM) is expected to maintain its Overnight Policy Rate (OPR) at 2.75 per cent for 2025, according to BMI, a unit of Fitch Solutions.

In a note today, BMI believed that the recent 25 basis points rate cut would be the last cut for this year.

"While this rate cut came earlier than we had expected, we retain the view that it will be the last of the current cycle and that the OPR will end the year at 2.75 per cent," it said.

BMI also anticipates that the banking sector has less to worry about inflation for now. 

Headline inflation eased to 1.2 per cent in May from 1.4 per cent in April year-on-year – the twelfth consecutive month it remained below the 10-year average of 2.0 per cent, it said.

"We caution that the RON 95 fuel subsidy rationalisation plan will add to price pressures and could potentially wrongfoot the bank if it loosens policy too extensively.

"Given that authorities are still in the final stages of discussions, we suspect the plan will only be implemented in 4Q 2025 at the earliest," it said, adding that the targeted nature of this programme suggests that its impact on headline inflation will be limited.

In the meantime, BMI expresses its less optimistic outlook on the tariff trade negotiation outcomes following the recent development.

"In the absence of discernible progress on trade negotiations, US President Donald Trump has further threatened to impose a 10 per cent tariff on countries that support the 'anti-American' policies of the BRICS group.

"This is negative news for Malaysia given its involvement as a partner country," it opined.

-- BERNAMA